SWIFT plans to go big

Alain Raes

Global financial messaging service provider SWIFT aims to integrate large companies operating in Bangladesh into its network.

The move will enable conglomerates to wire funds globally and locally through the network at a low cost and reduced risk.

“Bangladesh has a lot of scope to enhance SWIFT network. So, we want to integrate corporate firms into the network,” said Alain Raes, chief executive of SWIFT for Asia-Pacific region.

Currently, most companies in the country use multiple banking channels to collect and disburse funds, where long time and high cost are involved, Raes told The Daily Star in a recent interview in the capital.

The Belgium-based company also plans to work with Bangladesh Bank to build strong payment market infrastructure in the country.

The banking regulator has taken an initiative to introduce real-time gross settlement (RTGS) system in Bangladesh.

RTGS is a special fund transfer system where transfer of money or securities takes place from one bank to another on a “real time” and on “gross” basis.

“RTGS is expected to go live by the next year. So, we hope SWIFT will be selected as a messaging vehicle for the banks to reach the system.”

The global company also wants to enhance trade financing services as the country is gradually becoming a manufacturing hub, he said.

Trade accounts for 56.1 percent of the 1.34 million financial traffic sent by Bangladesh through the SWIFT network between January and March, said Raes.

SWIFT aims to promote “bank payment obligation”, a new payment instrument that helps increase demand of trade financing, he said.

Foreign exchange transactions through SWIFT in and out of Bangladesh rose 32.7 percent year-on-year to around eight million last year due to an increase in trade finance payment, Raes said.

SWIFT handles more than 24 million financial traffic a day worldwide, according to Raes.

Messages wired by SWIFT in three days are equivalent to the size of the global GDP—$71.83 trillion.

SWIFT is not a financial institution because it does not provide financial services nor hold client accounts or assets.

The company also aims to partner with the financial institutions in Bangladesh to ensure compliance.

Compliance is increasingly becoming a necessary burden for the financial institutions, as the regulations are frequently changing, Raes said.

Regulators across the world are focusing on a number of issues, such as an updated KYC (know your customer), compliance to anti-money laundering and counter-terrorist financing measures, he said.

“We have already developed a common solution which is useable by everyone. Banks and other financial institutions in Bangladesh can use these solutions,” he said.

Raes, who joined SWIFT in 1990, also promised to reduce its service fee for Bangladesh market in future.

For each transaction in and out of Bangladesh, SWIFT charges higher than the current global average rate of €0.06, he said, but he did not mention the rate.

“We pursue the economies of scale model to fix a rate. It means the more you send financial messages the cheaper they become,” he said.

Since Bangladesh registered robust growth in foreign exchange transactions through SWIFT in the last couple of years, the service fee will certainly decline, he said.

Raes was appointed as the head for Europe, Middle East and Africa region of SWIFT in September 2007 and got the additional role of chief executive for Asia Pacific in January 2013.

Based in Singapore, Raes is also a former director for the continental Europe region of SWIFT, where he covered securities and banking sales activities.

He joined SWIFT in 1990, following previous roles at Citibank in Belgium and Fortis Bank in Singapore. He has particular expertise in financial market infrastructure.

Raes came to Dhaka last week to mark SWIFT's 20 years of operation in Bangladesh when a programme was organised at the capital's Westin hotel.

The country ranks 16th in the Asia-Pacific region for the total sent traffic and 14th for received traffic, he said.

SWIFT, short for the Society for World-wide International Financial Telecommunication, is the member-owned cooperative that provides the communication platform, products and services to connect 10,500 banking organisations, securities institutions and corporate customers in 216 countries and territories.

The company was launched 40 years ago as an association of large European banks. The network does not transfer funds; rather it enables member banks to send secure instructions instantly to the correspondent banks to make payments.

Besides banks, corporate customers would also benefit directly from SWIFT's platform.

In May 1973, 239 banks from 15 countries created the SWIFT cooperative to build a common messaging system to fulfil the need of process financial transactions efficiently.

Its presence was extended to the US in 1979 and to Asia in 1980. Today, it handles more than 4 billion messages a year between financial institutions, market infrastructure and corporation.

The network was introduced in Bangladesh in 1994 by AB Bank and a few other ambitious commercial banks.

In 2002, the central bank started using SWIFT for their day-to-day payment and settlement activities.

All 56 commercial banks of the country have now become the members of SWIFT.

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